F&P Healthcare may beat profit forecast as kiwi's decline boosts export earnings, analysts say
By Tina Morrison
Sept. 12 (BusinessDesk) - Fisher & Paykel Healthcare, which exports 98 percent of its breathing masks and respirators, may post higher earnings than forecast in the current financial year as it benefits from a decline in the New Zealand dollar, according to analysts who follow the stock. The shares touched an intraday record.
The New Zealand dollar recently traded at 81.60 US cents, down from a peak of 88.35 cents in July in light of weaker expectations for growth and inflation as commodity prices soften and the Reserve Bank pulls back its expectation for interest rate increases next year. Reserve Bank governor Graeme Wheeler yesterday said the currency is still too high and he expects it to keep falling.
F&P Healthcare receives about 48 percent of its revenue in US dollars. In May, the company posted a 2014 profit of $97.1 million and said it expects "similar" profit in the 2015 year, based on the kiwi trading at 86 US cents. However analysts expect the company to report a higher 2015 profit of about $102 million, according to estimates compiled by Reuters.
"With the New Zealand dollar moving from headwind to tailwind, we reiterate our 'buy' recommendation," Craigs Investment Partners research analyst Stephen Ridgewell said in a note following yesterday's Reserve Bank monetary policy statement.
Ridgewell raised his expectation for 2015 earnings by 2.6 percent to $102 million and his forecast for 2016 by 5.2 percent to $113 million, reflecting the company's lower hedging cover in place in later years.
He also upgraded his 12 month price target to $5.56 from $4.91.
Shares in F&P Healthcare touched a record $5.30 in intraday trading and closed down 0.2 percent to $5.25.